substitute for

House BILL NO. 5153

A bill to amend 1961 PA 236, entitled

"Revised judicature act of 1961,"

by amending sections 3240 and 3252 (MCL 600.3240 and 600.3252), section 3240 as amended by 2019 PA 130, and by adding section 3240a.

the peoplE of the state of michigan enact:

Sec. 3240. (1) A purchaser's deed under section 3232 is void if the mortgagor, the mortgagor's heirs or personal representative, or, subject to sections 3214 and 3240a, any person that has a recorded interest in the property lawfully claiming under the mortgagor or the mortgagor's heirs or personal representative redeems the entire premises sold by paying the amount required under subsection (2) and any amount required under subsection (4), within the applicable time limit prescribed in subsections (7) to (12), to the purchaser or the purchaser's personal representative or assigns, or to the register of deeds in whose office the deed is deposited for the benefit of the purchaser.

(2) The amount required to be paid under subsection (1) is the amount that was bid for the entire premises sold, interest from the date of the sale at the interest rate provided for by the mortgage, the amount of the sheriff's fee paid by the purchaser under section 2558(2)(q), and an additional $5.00 as a fee for the care and custody of the redemption money if the payment is made to the register of deeds. Except as provided in subsection (14), the register of deeds shall not determine the amount necessary for redemption. The purchaser shall provide an affidavit with the deed to be recorded under this section that states the exact amount required to redeem the property under this subsection, including any daily per diem amounts, and the date by which the property must be redeemed shall must be stated on the certificate of sale. The purchaser may include in the affidavit the name of a designee responsible on behalf of the purchaser to assist the person redeeming the property in computing the exact amount required to redeem the property. The designee may charge a fee of not more than $250.00 as stated in the affidavit and may be authorized by the purchaser to receive redemption money. The purchaser shall accept the amount computed by the designee.

(3) If a distinct lot or parcel separately sold is redeemed, leaving a portion of the premises unredeemed, the deed is void only to the redeemed parcel or parcels.

(4) If, after a sale under section 3216, the purchaser, the purchaser's heirs or personal representative, or any person lawfully claiming under the purchaser or the purchaser's heirs or personal representative pays taxes assessed against the property, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or premiums on an insurance policy covering any buildings located on the property that under the terms of the mortgage it would have been the duty of the mortgagor to pay if the mortgage had not been foreclosed and that are necessary to keep the policy in force until the expiration of the period of redemption, the property may be redeemed only on payment of the amount specified in subsection (2) plus the amounts specified in this subsection with interest on the amounts specified in this subsection from the date of the payment to the date of redemption at the interest rate specified in the mortgage. This subsection does not apply unless all of the following are filed with the register of deeds with whom the deed is deposited:

(a) An affidavit by the purchaser or someone in his or her the purchaser's behalf who has knowledge of the facts of the payment showing the amount and items paid.

(b) The receipt or copy of the canceled check evidencing the payment of the taxes, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or insurance premiums.

(c) An affidavit of an insurance agent of the insurance company stating that the payment was made and what portion of the payment covers the premium for the period before the expiration of the period of redemption.

(5) If the redemption payment in subsection (4) includes an amount used to redeem a senior lien from a nonjudicial foreclosure, the mortgagor has the same defenses against the purchaser with respect to the amount used to redeem the senior lien as the mortgagor would have had against the senior lien.

(6) The register of deeds shall indorse on documents filed under subsection (4) the time they are received. The register of deeds shall record the affidavit of the purchaser only and shall preserve in his or her the register's files the recorded affidavit, receipts, insurance receipts, and insurance agent's affidavit until expiration of the period of redemption.

(7) Subject to section 3238, for a mortgage executed on or after January 1, 1965, of commercial or industrial property, or multifamily residential property in excess of 4 units, the redemption period is 6 months from the date of the sale.

(8) Subject to subsections (9) to (11) and section 3238, for a mortgage executed on or after January 1, 1965, of residential property not exceeding 4 units, if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66-2/3% of the original indebtedness secured by the mortgage, the redemption period is 6 months.

(9) For a mortgage of residential property not exceeding 4 units, if the property is abandoned as determined under section 3241, the redemption period is 1 month.

(10) If the property is abandoned as determined under section 3241a, the redemption period is 30 days or until the time to provide the notice required by section 3241a(c) expires, whichever is later.

(11) Subject to section 3238, for a mortgage of property that is used for agricultural purposes, the redemption period is 1 year from the date of the sale.

(12) If subsections (7) to (11) do not apply, and subject to section 3238, the redemption period is 1 year from the date of the sale.

(13) The amount stated in any affidavits recorded under this section is the amount necessary to satisfy the requirements for redemption under this section.

(14) The register of deeds of a county with a population of more than 750,000 and less than 1,500,000, at the request of a person entitled to redeem the property under this section, shall determine the amount necessary for redemption. In determining the amount, the register of deeds shall consider only the affidavits recorded under subsections (2) and (4). A county, register of deeds, or employee of a county or register of deeds is not liable for damages proximately caused by an incorrect determination of an amount necessary for redemption under subsection (2).

(15) A register of deeds may charge not more than $50.00 for determining the amount necessary for redemption under this section.

(16) For the purposes of this section, there is a presumption that the property is used for agricultural purposes if, before the foreclosure sale under this chapter, the mortgagor provides the party foreclosing the mortgage and the foreclosing party's attorney proof that the mortgagor filed a schedule F to the mortgagor's federal income tax form 1040 for the year preceding the year in which the proceedings to foreclose the mortgage were commenced and records an affidavit with the register of deeds for the county in which the property is located stating that the proof has been delivered. If the mortgagor fails to provide proof and record an affidavit as required by this subsection before the foreclosure sale, there is a presumption that the property is not used for agricultural purposes. The party foreclosing the mortgage or the mortgagor may file a civil action to produce evidence to rebut a presumption created by this subsection. An action under this subsection must be filed before the expiration of the redemption period that would apply if the property is determined not to be used for agricultural purposes.

Sec. 3240a. (1) Except as provided in subsection (7), an assignment or transfer of the mortgagor's right of redemption recognized by section 3240 is subject to the requirements and remedies of this section. All of the following apply to an assignment or transfer of the mortgagor's right of redemption:

(a) An assignment or transfer by testate or intestate succession is not subject to the notice, cooling-off, or recording requirements of this section.

(b) An assignment or transfer that is genuinely without consideration is not subject to the notice, cooling-off, or recording requirements of this section, except as provided in subdivision (c).

(c) An assignment or transfer is subject to subdivision (d), even if denominated as a gift or as being without consideration, if either of the following applies:

(i) The assignee or transferee, a beneficial owner or controlling person of the assignee or transferee, or a person acting in concert with any of them acquires the right of redemption in the course of a trade or business.

(ii) Any consideration, in any form, is given or promised, directly or indirectly, by or on behalf of the assignee or transferee in connection with the assignment or transfer.

(d) Any other assignment or transfer requires a notice of redemption rights that satisfies the requirements of subsection (2), provided to the assignor before execution of the instrument of assignment, but not before the cooling-off period under subsection (5) has elapsed. An assignment or transfer that does not comply with this subdivision is valid and recordable, but the assignee is liable to the assignor for damages as provided in subsection (3). The register of deeds is not required to evaluate compliance with this section before recording an instrument of assignment.

(e) A conveyance of the mortgaged premises that does not expressly exclude the mortgagor's right of redemption is presumed to include an assignment of that right and is subject to both this section and section 3214.

(f) A person who acquires the mortgaged premises by conveyance subject to section 3214 and who, as a result of a foreclosure sale occurring after the execution of that conveyance, holds only the mortgagor's right of redemption, may exercise that right of redemption without providing the notice required under subdivision (d). Compliance with the notice requirements of section 3214 at the time of the conveyance satisfies the notice requirements of this section with respect to that conveyance.

(2) All of the following apply to a notice of redemption rights required under subsection (1)(d):

(a) The notice must be a separate document from the instrument of assignment and any other document.

(b) The notice must be printed in not less than 14-point boldfaced type.

(c) The notice must be signed and dated by the assignor.

(d) A copy of the fully executed notice, signed and dated by all parties, must be provided to the assignor at the time of signing.

(e) Before presenting the notice to the assignor for signature, the assignee must complete all blanks in the notice, including all property value disclosures required by the notice language under subdivision (g). A notice presented with any required blank unfilled does not satisfy the requirements of this subsection.

(f) The notice must identify the property by street address and by each tax parcel identification number assigned to the property. If the property consists of more than 1 parcel, the notice must list every parcel identification number. If no street address or parcel identification number has been assigned, the notice must include the legal description of the property. A good-faith error in, or omission of, a parcel identification number does not, by itself, make the notice noncompliant or give rise to liability under subsection (3) if the property is otherwise reasonably identified in the notice.

(g) The notice must contain the following language and must include the assignor signature and date:

NOTICE TO SELLER OF REDEMPTION RIGHTS: READ THIS DOCUMENT CAREFULLY.

YOU ARE SELLING YOUR RIGHT TO RECLAIM YOUR HOME AFTER A FORECLOSURE SALE. THIS IS A LEGAL AND FINANCIALLY SIGNIFICANT DECISION. YOU SHOULD SEEK LEGAL COUNSEL OR CONTACT A HUD-CERTIFIED HOUSING COUNSELOR BEFORE SIGNING ANY DOCUMENTS.

PROPERTY THIS NOTICE CONCERNS

STREET ADDRESS: ______________________________

TAX PARCEL IDENTIFICATION NUMBER(S): ______________________________

(IF THIS PROPERTY CONSISTS OF MORE THAN ONE PARCEL, LIST EVERY PARCEL IDENTIFICATION NUMBER ABOVE. THIS NOTICE COVERS ALL PARCELS LISTED.)

LEGAL DESCRIPTION (REQUIRED ONLY IF NO STREET ADDRESS OR PARCEL NUMBER HAS BEEN ASSIGNED; MAY BE ADDED IN ANY CASE): ______________________________

PROPERTY VALUE DISCLOSURE (TO BE COMPLETED BY THE BUYER)

1. CURRENT STATE EQUALIZED VALUE (SEV): $__________________

(This amount is a matter of public record available from the local assessor.)

2. APPROXIMATE MARKET VALUE (SEV x 2): $__________________

(Multiplying the SEV by 2 provides an estimate of the property's market value. This figure is an estimate only and may not reflect actual market value. You are encouraged to obtain an independent appraisal before signing.)

3. REDEMPTION AMOUNT: $__________________

(This is the exact amount required to redeem the property as stated in the purchaser's affidavit filed with the register of deeds under section 3240(2) of the revised judicature act of 1961, 1961 PA 236, MCL 600.3240. This amount increases daily. The per diem rate is $__________ per day.)

4. APPROXIMATE VALUE OF YOUR REDEMPTION RIGHT (Line 2 MINUS Line 3): $__________________

(This is the approximate value of what you are selling. If this number is positive, your home may be worth more than the redemption amount.)

5. AMOUNT YOU ARE BEING PAID FOR YOUR REDEMPTION RIGHT: $__________________

6. REDEMPTION EXPIRATION DATE: __________________

(After this date, your right to reclaim the property expires permanently.)

YOU ARE GIVING UP YOUR RIGHT TO RECLAIM YOUR HOME.

This document serves as a formal notice of certain rights that will be forfeited upon the assignment of your redemption right. By signing the assignment and completing this transaction, you will be waiving and relinquishing rights you may have under statute, as follows:

1. Right of Redemption: By assigning your redemption right, you permanently waive any and all rights to redeem or reclaim the property. This right is irrevocably forfeited upon your completion of the assignment.

2. Right to Occupancy During the Redemption Period: You currently have the right to remain in the property until the redemption period expires or the property is redeemed, whichever occurs first. This right ends upon redemption by the assignee or expiration of the redemption period, not upon your signing of this assignment.

IF YOU SIGN AN ASSIGNMENT AGREEMENT, YOU WILL BE TRANSFERRING YOUR RIGHT TO REDEEM THIS PROPERTY TO ANOTHER PERSON. BY LAW, THAT AGREEMENT MAY NOT BE PRESENTED TO YOU FOR SIGNATURE UNTIL 7 DAYS AFTER THE DATE YOU SIGN THIS NOTICE. IF YOUR REDEMPTION PERIOD WILL END LESS THAN 7 DAYS AFTER YOU SIGN THIS NOTICE, THE BUYER CANNOT ASK YOU TO SIGN THE AGREEMENT UNTIL THE DAY BEFORE YOUR REDEMPTION PERIOD EXPIRES (SHOWN ABOVE AS THE REDEMPTION EXPIRATION DATE). ONCE YOU SIGN THAT AGREEMENT, YOU WILL HAVE NO RIGHT TO RECLAIM THE PROPERTY EVEN IF YOU LATER OBTAIN THE MONEY NECESSARY TO PAY THE REDEMPTION AMOUNT.

WARNING: THIS DOCUMENT MAY NOT BE BACKDATED. SIGNING THIS DOCUMENT WITH A FALSE DATE IS FRAUD UNDER MICHIGAN LAW AND MAY RESULT IN CRIMINAL PROSECUTION AND CIVIL LIABILITY.

(3) An assignee who fails to provide a notice of redemption rights as required under subsection (1)(d) is liable to the assignor for damages as follows:

(a) The measure of damages is the fair market value of the premises at the time of assignment less the redemption amount as stated in the purchaser's affidavit filed under subsection (2), less the consideration actually paid by the assignee to the assignor. As used in this subdivision, "consideration actually paid" means the cash or cash equivalent actually received by the assignor at or before closing, not including any amounts paid by the assignee directly to satisfy the redemption amount or other obligations encumbering the premises.

(b) The assignor bears the initial burden of establishing a reasonable estimate of the fair market value of the premises at the time of assignment by competent evidence. Competent evidence for this purpose includes, but is not limited to, a retrospective appraisal by a licensed appraiser, comparable sales data for similar properties in the same area within a reasonable time of the assignment, or the actual foreclosure sale price if available. Upon the assignor establishing a reasonable estimate of fair market value, the burden shifts to the assignee to rebut that estimate by a preponderance of the evidence.

(c) If the court finds that the violation was willful, the court shall award 2 times the damages calculated under subdivision (a). A violation is presumed willful if any of the following apply:

(i) The assignee is a person other than an individual, and the assignee's stated or apparent business purpose involves acquiring distressed or foreclosed properties.

(ii) The assignee, or a beneficial owner or controlling person of the assignee, has acquired more than 1 redemption right assignment within the 3 years preceding the assignment at issue.

(iii) The notice of redemption rights was backdated, as established by any evidence including, but not limited to, document metadata, witness testimony, or inconsistency with other transaction documents.

(iv) The assignee took affirmative steps to prevent the assignor from seeking legal counsel, including, but not limited to, requiring same day signing, misrepresenting the nature of the documents, or representing that the notice of redemption rights was not required.

(v) The assignee failed to record the instrument of assignment and the notice of redemption rights not later than 120 days after execution.

(d) In addition to damages under subdivision (a) or (c), the court shall award the assignor reasonable attorney fees and costs if the assignor prevails.

(4) An individual who is a beneficial owner of, or who exercises control over the management or operations of, an entity that is subject to this section is jointly and severally liable with the entity for all damages and attorney fees awarded under this section. A beneficial owner or controlling person is presumed to have had actual knowledge of the recorded notice of foreclosure at the time of the assignment. This presumption may be rebutted by clear and convincing evidence.

(5) An assignee shall not present an instrument of assignment subject to this section to the assignor for execution before 7 days after the assignor has signed the notice of redemption rights required under subsection (1)(d). An instrument of assignment, or an agreement, option, or contract to assign a redemption right, executed in violation of this 7-day cooling-off period is a per se willful violation under subsection (3)(c). This 7-day cooling-off period is mandatory and cannot be waived. If the applicable redemption period under section 3240 expires within 7 days of the date the assignor signed the notice of redemption rights, the cooling-off period is reduced to 1 day less than the number of days remaining in the redemption period at the time the notice was signed.

(6) This section applies only to residential property that does not exceed 4 units. For the purposes of this section, property that is used in part for nonresidential purposes is residential property only if the residential use is the principal use of the property.

(7) This section does not apply if the assignee is the person foreclosing the mortgage or is a person that has an interest in the property that is subordinate to the interest of the person foreclosing the mortgage.

(8) It is an affirmative defense to liability under subsection (3) for a violation of subsection (2) that the assignee provided the assignor a notice of redemption rights that contained all completed property value disclosures required under subsection (2)(g), the assignor signed and dated the notice, the cooling-off period required under subsection (5) was observed, and the defect did not mislead or prejudice the assignor.

(9) Not later than 30 days after execution of an instrument of assignment subject to this section, the assignee shall record the instrument, with the fully executed notice of redemption rights required under subsection (1)(d) attached, with the register of deeds for the county or counties in which the premises are located.

(10) An assignee who fails to comply with subsection (9) is liable to the assignor for a civil penalty of $50.00 for each day the failure continues, beginning on the thirty-first day after execution and ending on the date the instrument and attached notice are recorded, not to exceed $25,000.00 for each instrument, and liable for reasonable attorney fees and costs if the assignor prevails. A penalty under this subsection is in addition to, and not instead of, any liability under subsection (3).

(11) The period of limitations for an action under subsection (3) does not begin to run until both the instrument of assignment and the notice of redemption rights required under subsection (1)(d) are recorded as required under subsection (9).

(12) The existence of a notice signed under this section is not a defense against a claim of fraud, duress, misrepresentation, or unconscionability and does not preclude any other remedy at law or equity available to the assignor.

Sec. 3252. (1) If Except as otherwise provided in this section, if, after any a sale of real estate , made as herein prescribed, there shall remain in the hands of under this chapter, the officer or other person making the sale , has any surplus money after satisfying the mortgage on which the real estate was sold , and payment of paying the costs and expenses of the foreclosure and sale, the surplus officer or person making the sale shall be paid over by the officer or other person pay the surplus on demand , to the mortgagor , his or the mortgagor's legal representatives or assigns. , unlessThe demand to pay the surplus may not be made less than 90 days after the sale of the real estate unless a claim is filed under subsection (2).

(2) Subsection (1) does not apply if, at the time of the sale , or before the surplus shall be so is paid over, some a claimant or claimants , shall file with the officer or person so making the sale , a claim or claims, in writing , duly and verified by the oath of the claimant , his or the claimant's agent , or attorney, that the claimant has a subsequent mortgage or lien encumbering the real estate, or some part thereof, and of the real estate, stating the amount thereof unpaid on the mortgage or lien, and setting forth the facts and nature of the same, in which case mortgage or lien. If a claim is filed under this subsection, the officer or person so making the sale , shall, forthwith upon receiving the claim, pay the surplus to, and file the written claim with the clerk of file a complaint in interpleader under MCR 3.603 in the circuit court of the county in which the sale is so made, attach a copy of the written claim to the complaint, and deposit the surplus with the court in accordance with MCR 3.603(B). ; and thereupon any

(3) After a complaint in interpleader is filed and the surplus is deposited under subsection (2), a person or persons interested in the surplus , may apply to move the court for an order to take proofs of the facts and circumstances contained in the claim. or claims so filed. Thereafter, After a motion is filed under this subsection, the court shall summon the claimant or claimants , and the party , or parties interested in the surplus , to appear before him the court at a time and place to be by him named , and attend the taking of the proof, and the claimant or claimants or and any interested party interested who shall appear that appears may examine witnesses and produce such proof as they or either of them may see fit. , and After hearing the evidence, the court shall thereupon make enter an order in the premises directing the disposition or payment of the surplus moneys or payment thereof money in accordance with the rights of the claimant or claimants or and the interested persons. interested.

(4) The mortgagor's right to surplus money recognized by this section is not assignable or transferable after the first publication of the notice of foreclosure under section 3208, except by testate or intestate succession. This subsection applies only to residential property, as described in section 3240a(6).

(5) The state court administrative office shall develop and make available a standardized form for use as a complaint in interpleader that can be used for the procedure authorized under subsection (2). Use of the form developed under this subsection satisfies the requirements of subsection (2) and the pleading requirements for a claim under MCR 6.302.

Enacting section 1. This amendatory act does not take effect unless House Bill No. 5152 of the 103rd Legislature is enacted into law.